The American consumer seems to have a split personality, buying luxury with aplomb while pinching every penny. Or so it seems ...
Last quarter, I reported on a strange and somewhat disturbing trend. Sales were up at both deep discounter Dollar Tree
Revenue at Williams-Sonoma rose 11.8%, while same-store sales increased by 8.1%. Gross margin climbed strongly from 34.7% to 38.2%, suggesting that the retailer was able to exert pricing power. On the other end of the retail spectrum, Dollar Tree reported very similar results, with revenue up 14.2% and same-store sales up 8.7%.
The situation isn't isolated to Dollar Tree and Williams-Sonoma, either. Wal-Mart
Interestingly, Wal-Mart reported a 9.3% leap in its international sales, which the company noted primarily came from China, Japan, Mexico, and Brazil. The implication here is that the U.S. is in dire straits right now (not totally new information), but that other countries, especially in emerging markets, might be faring better.
As for domestic investing, though, any retailers in the middle of the economic spectrum will have some trouble. Companies able to sell profitably at very rock-bottom prices will see market-share gains as more families fall on hard times. But so will companies that cater to wealthier customers who've been largely unfazed by the crisis.